GCC expansion facing delays amid tariff, geopolitical uncertainties

Time of India

02-05-2025

The setting up of new global capability centres (GCCs) and expansion of existing ones are facing some short-term pauses and delayed decision-making – particularly in tariff-sensitive sectors like automotive – amid uncertainty over proposed US tariffs, experts tracking the space told ET.
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A large US-based technology firm with a GCC in Noida, which wanted to expand, has decided to wait till September before finalising plans, citing reports that the US economy has shrunk, said Alouk Kumar, CEO of Inductus, a consulting firm that advises GCCs.
'Firms across sectors like healthcare, BFSI and aviation, who had made enquiries to set up in India, have also delayed final decisions,' Kumar said.
Delayed decision-making is particularly noticeable in tariff-sensitive sectors like automotive and integrated hardware, experts said.
'But these are more tactical pauses than structural pullbacks,' said Karthik Padmanabhan, managing partner-GCC advisory at management consulting firm Zinnov.
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The proposed US tariffs and heightened geopolitical tensions are adding to concerns.
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'While it is still early to fully assess the extent of the impact, geopolitical developments are contributing to near-term caution,' Rajesh Nambiar, president of industry body Nasscom, told ET.
The impact may become more visible if uncertainties linger, experts said.
Existing GCCs are under pressure from their headquarters to optimise costs.
'We're observing a clear directive from global HQs for Indian GCCs to optimise costs amidst economic uncertainties, not through drastic cuts but via strategic enhancements,' said Kumar of Inductus.
Zinnov's Padmanabhan said GCCs are aggressively adopting generative artificial intelligence (GenAI) and robotic process automation (RPA) to cut down effort in finance, human resources, and operations.
Costs are also being optimised through a focus on location diversification to tier-2 and tier-3 cities and structural redesign moving towards productised pods that are leaner and deliver more, he added.
Bright outlook
The long-term outlook remains optimistic for India, while recruitment by GCCs is continuing as usual with no hiring freezes on the cards.
'Any changes will depend on significant HQ budget cuts, making this a wait-and-watch situation,' said Arindam Sen, partner and GCC sector leader-technology, media & entertainment, and telecommunications, at EY India.
There is, however, a greater focus on critical and niche skills in AI/ML, cybersecurity, cloud, and data engineering, and on value rather than volume in hiring, said Jaspreet Singh, partner at Grant Thornton Bharat.
Padmanabhan feels the ripple effects of the tariffs may even be a tailwind for India, with an uptick in digital supply chain work, nearshoring support, and product engineering mandates being shifted to India already.
'Despite concerns about Trump's pro-America policies, the Indian GCC ecosystem is unlikely to face a slowdown,' said Vikram Ahuja, cofounder of ANSR, a GCC advisory firm. 'While policy shifts may influence outsourcing trends in certain industries, the demand for AI,
digital transformation
and specialised talent will continue to drive US companies to leverage India's GCCs as strategic assets.'
India is on track to reach 1,900 GCCs by end-2025 from 1,700 in FY24, according to estimates from Zinnov.
GCCs in the country currently employ about 1.9 million people and generate $64.6 billion in revenues, as per industry estimates. This is projected to reach about $99-105 billion by FY2030, employing 2.5-2.8 million people.